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A return of the controversial practice of dividend recapitalisations, popular among private equity firms before the financial crisis, has helped investors in the industry enjoy positive cash flows for the first time since 2007.

Dividend recapitalisations – which involve a private equity owner carrying out a refinancing to pay itself a dividend – have driven the increase in cash distribution back to private equity investors, according to a report by placement agent Triago.

The report found that distributions of cash to investors have started to outweigh capital calls for private equity investors for the first time since the boom, offering hope that the fundraising environment may start to improve.

A capital call involves investors paying out cash that it had previously committed to a private equity fund for a deal.

According to Triago, distributions to investors globally reached 6% of committed capital in the first half of the year, which was just ahead of calls to finance buyouts, which were at 5.5%.

In the wake of the financial crisis, some private equity investors were caught out by having committed too much capital as their funds had relied on using future cash distributions, which failed to materialise when the market went sour.

Between 2004 and 2007, the annual average distributions were 19.5% compared with calls of 15%. But since the financial crisis calls have outweighed distributions with financial sponsors often unable or unwilling to sell the assets they are holding.

Distributions reached just 2% in 2009, compared with calls of 5%. By last year, this had narrowed to distributions of 9% and calls of 10%. It is unclear whether the distributions this year will continue to outweigh capital calls. Triago estimates calls will amount to 11% with distributions reaching 10%.

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Triago said the positive cash flows back to investors had been “powered” by an increase in dividend recapitalisations, “with many arranged by [firms] looking to return cash to [investors] before launching fundraising campaigns”.

It said: “S&P LCD counts more than $28bn in dividend loans arranged year-to-date through July, on pace to virtually match 2007’s annual record of $49.3bn.”

The increased distributions in comparison to capital calls should offer investors greater ability to commit new capital to funds. Buyout firms have struggled to raise new capital in recent years, but Triago estimates fundraising should reach $265bn in 2012, a 15% increase over 2011.

In addition, many funds are running out of time to invest their capital, which Triago believes could also help fundraising as investors will be able to earmark any commitments that are not used to new funds. Triago estimates $193bn in leveraged buyout commitments is due to expire over the next 16 months.